The H-1B system needs an overhaul. For now, let's award visas to the highest-paid foreign workers and top graduates from top U.S. schools
The U.S. government will use a random computer lottery to determine which of 163,000 applicants receive the 85,000 work visas it grants this year under the so-called H-1B program. This roster of foreign workers includes some of the world's best and brightest minds. There must be a better way to determine which of them get the nod to work at U.S. companies such as Microsoft (MSFT) and Google (GOOG)—and which must return to their home countries, where they're likely to become our global competitors.
Finding the right solution to this contentious issue won't be easy. Opponents say H-1B visas cause job losses. Employers say they help fill critical job openings. Tech executives like Microsoft Chairman Bill Gates and Intel (INTC) Chairman Craig Barrett press for unlimited numbers of these temporary work visas; unemployed tech workers fight for their elimination. While these debates rage, there are bigger, related problems brewing. We have more than 1 million skilled workers and their families who are already here on temporary visas, and who are stuck in "immigration limbo" (BusinessWeek.com, 8/22/07).
Professor Guillermina Jasso of New York University, who is considered a leading expert on immigration, says the lottery system was designed to "provide a semblance of fairness." The American people and policymakers have not been able to agree on the exact criteria for admitting skilled H-1Bs, she says. One side argues that there is a hierarchy of skill and that we should choose from the top down. But others say we need to diversify and sample from a broad spectrum of skills. In the absence of any consensus, the lottery is the best way to go despite its flaws, Jasso says.
The Salary Issue
The problem is that the lottery and temporary visa system may be distorting market dynamics. I know from my experience as a tech CEO that H-1Bs are cheaper than domestic hires. And if we bring in too many workers at the lower end of the scale, we could end up causing a reduction of salaries to the point that Americans don't consider technology-related professions worthwhile. Already there are indications that enrollments in computer science have dropped. The fact is that if you flood the market with workers with any skill, you end up hurting the profession—causing salaries to drop and unemployment to increase.
A short-term fix to the H-1B problem may be found in a proposal by the most unlikely player: the Programmers Guild, the group that has been the most ardent opponent of H-1B visas. The guild says that instead of deciding who gets a visa by lottery, we should pick the most highly skilled based on their salaries. And we should give preference to the top graduates of our universities. We won't need to increase the numbers of visas if we're more selective, or so the argument goes. We can't have a random lottery determine which jobs get filled or which students get to stay. We want to fill the most specialized jobs and to keep the best and brightest.
Kim Berry from the Programmers Guild says that in the tech world, those who have the best skills are usually the highest paid. Salary is an effective proxy for skill. He argues that a PhD genetics researcher should never lose out to a $16-a-hour accountant. If H-1B visas were granted in this manner, "every $100,000 H-1B that Bill Gates filed would get approved," he argues. And any business with a critical need for an H-1B candidate could be assured of approval by paying a higher wage.
Then there's the matter of students. There are more than 250,000 foreign students studying in our universities. In our engineering schools, 60% of PhDs and 42% of master's candidates are foreign nationals. These students are often the best of their home countries. But there are only 20,000 H-1B visas available for graduates at the master's level and above. And there were 31,200 applications for these visas. Bachelor's-level graduates don't get a special allocation—they need to compete in the general pool, which has 65,000 visas available.
Instead of a lottery deciding who gets to stay, Berry says, these visas should be allocated based on school and student ranking. And he suggests giving preference in the general visa pool to engineering and science graduates from American universities.
The downside here is that we may leave out some of the most promising students who graduate from lower-ranked schools. School ranking doesn't always translate into career or entrepreneurial success (BusinessWeek.com, 8/31/07).
The disadvantage of the guild's proposal that visas be granted to the highest-paid employees is that it would favor those working for big companies who have the most experience. It would disadvantage startup tech companies that can't afford to pay high salaries and hire the most experienced workers (BusinessWeek.com, 1/15/08).
Bring Workers to Stay
There is no perfect system, but I believe that allocating visas based on skill and giving preference to the graduates of American schools would solve some of the most urgent problems with the H-1B program. It would reduce the salary distortion and provide a way for corporations to increase their odds of getting who they really want.
The lasting solutions lie in bringing in highly skilled immigrants on permanent resident visas instead of these temporary visas. My research at Duke University has shown how skilled immigrants boost the economy and create jobs. After surveying more than 2,000 tech companies from 1995-2005, we learned that 25.3% of all companies started nationwide and 52% of those started in Silicon Valley had immigrants as founders (BusinessWeek.com, 1/3/07). In 2005, these companies generated $52 billion in revenue. And they employed 450,000 workers—which is greater than the number of engineers and scientists we admitted in that 10-year time frame.
H-1B holders can't start companies and can only stay up to six years. If they do decide to become permanent residents, they face long delays in visa processing, especially if they come from the most populous countries. The immigration department is currently processing visas for those Indians and Chinese who filed applications in 2001. Once these workers have filed for permanent residence, they can't change employers or even be promoted to a different job in the same company—or they have to restart the application process and move to the back of the line. Their spouses aren't allowed to work or obtain Social Security numbers—which are usually needed for things like driver's licenses and bank accounts. And these workers can't lay deep roots in American society because of the uncertainty about their future.
That is why we need to be selective in the skills we import, and once we bring these workers here, we bring them to stay. We also want a level playing field for American workers to compete with foreign workers. And we want these immigrants starting companies and creating jobs. Ultimately we need a major overhaul of the temporary work visa system, but short-term fixes are a good place to start.